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Nervous market has affected sales: Audi

Outlier: The A5 (below) and A5 Sportback (left) are the only two models in Audi’s stable that have improved in sales compared with last year largely thanks to the launch of new-generation versions of each.

Audi Australia backs away from volume focus to build brand

A DOWNTURN in consumer confidence has “dramatically” affected sales of premium new vehicles, according to Audi Australia, with typical buyers of the German brand now declining to upgrade to newer models as frequently as in previous years.

Speaking with GoAuto at the national media launch of the Q2 2.0 TFSI quattro in northern New South Wales last week, Audi Australia marketing and communications director Anna Burgdorf said that while “growth is certainly slowing” in the premium new vehicle market, the car-maker has switched its focus from volume-driven goals to a series of broader targets.

“I wouldn’t say it’s a bad time, but I would say of course that it’s a challenging time for the brand and the market in general,” she said.

“I think there’s a lot of pressure on households in general, and affordability, particularly in big markets like Sydney and Melbourne. We see the impact of consumer confidence quite dramatically and we see the impact of mortgages as another key feature, because things now feel tighter.

“I think also, you see in the particular political climate we’re in, there’s less surety about what’s to come and so that certainly does have an impact.

“You see that across the whole premium industry. People who appreciate and like luxury things, they have to make a priority list like everyone else. What we see (as a result) is that the buying cycle is lengthening.”

Ms Burgdorf added that it was not only uncertain market conditions beyond the automotive sphere that was making buyers think twice about upgrading to a newer model, but premium new vehicle brands had potentially become a victim of their own discounting in a market-wide pursuit to boost sales volumes.

“Of course there’s also a push for volume in the premium segment (and) I think that makes people in a way nervous, if brands are heavily focused on retail,” she continued.

“Customers do notice that and they also wait for the right time to buy. But also in general the industry’s changing and people are waiting to see what’s coming. What’s coming in electric vehicles … or do I really need a second car in my household, or is it time to start downsizing to one car?“People are starting to think about how they spend their money on mobility. All of those little nuances and little changes can have a dramatic effect (on sales).”

According to VFACTS, Audi sales in Australia have contracted by 9.8 per cent to the end of October 2017, with year-to-date volume of 18,047 running 1954 behind the same period in 2016. By comparison, the drop in volume sits slightly above October 2014 levels (16,014) but below that of October 2015 (19,082).

BMW has dropped by an even greater degree so fa this year – down 15.0 per cent and 3660 sales to 20,689 – while conversely, Mercedes-Benz has grown by 4.9 per cent and 1459 sales to 31,319.

Of the 15 models Audi currently sells, only two have delivered a nominal sales increase this year – the A5 coupe/convertible and A5 Sportback – and although the new-for-2017 Q2 has added a fresh 1567 sales, it has not turned the tide.

“For us it’s really a consolidation time,” Ms Burgdorf added, insisting that Audi was not alone in being caught up in discounting practices to achieve sales targets.

“A race for volume isn’t really benefitting anyone, and particularly not the people that we’re here to serve, which are the customers. We’re interested in a healthy, sustainable business, so I think that’s the model that we need to follow.”

Ms Burgdorf reiterated the position made by Audi Australia managing director Paul Sansom at the national media launch of the Audi Q5 in August, which called for a reduced focus on outright volume and an increased focus around four main pillars – brand image, product strategy, ownership experience and loyalty.

However, Ms Burgdorf added that key management changes made within the company earlier this month were designed to address each of these key pillars, and were based around research conducted by Mr Sansom since his appointment to the position of managing director earlier this year.

“He (Mr Sansom) spent probably the first three months really looking at the business from an outsider’s perspective,” she said.

“Looking at what he felt we needed, where the market was. He did an awful lot of listening to a whole lot of inputs before forming what he saw as our business strategy to move forward.”

As previously reported by GoAuto, a new product planning director role was created for Shawn Ticehurst, who was lured after two decades of service from BMW Australia where he most recently held the role of head of product and market planning.

“He (Mr Ticehurst) is a director who reports to our managing director because we see that as something that we really need to focus on,” Ms Burgdorf added.

“We need to make sure that Audi is the best it can be from a product and value perspective because that’s what brings customers into the brand.”

She labelled the appointment of Joshua Wood to the role of director for digitalisation and customer relationship management (CRM) as an example of “the ownership experience and loyalty (being) a clear focus are for our business” and because “digitisation is a mega-trend well and truly on us”.

Among the several management shifts within the company, Ms Burgdorf also added responsibility for marketing to her vast experience in an Audi Australia communications director role, “to bring under one roof all of our brand image building activities within one person’s job, whereas in the past it was split.”“I think (they are) some steps that we’ve taken recently to reflect that need or that focus on these four areas,” she added.